Coronavirus and the UK Economy

Economic experts have warned that the global coronavirus pandemic and lockdown measures in place across the world may cause the UK economy to shrink by 35%. The BBC has reported that independent tax and spending watchdog, The Office for Budget Responsibility, has raised the alarm over the potential spill-out from the coronavirus pandemic. While making the stark warning, the independent watchdog added that the 35% reduction projection also included a massive growth of unemployment from 3.9% to 10%. However, despite its findings making for ominous reading, the research was premised on two hitherto unknown constants. Firstly, the model used by The Office for Budget Responsibility was based on a projection of a three-month lockdown. Secondly, the organisation added to its findings that despite the obvious potential for the UK economy to shrink, it expected business to hastily return to normal, in the immediate aftermath of a lockdown.

Broader Impact of Coronavirus on the UK Economy

With a vast proportion of the country’s employees placed on the government’s Coronavirus Job Retention Scheme, many employees have simply been furloughed. However, increasing numbers have fallen foul of the job market, with record numbers of Universal Credit application being submitted. In the last two weeks of March, 500,000 people started the process of claiming Universal Credit. Figures from the first week of April denote a significant drop. Yet, statistics on web searches for terms related to unemployment and unemployment benefits remain high. Jobs website Indeed.co.uk has reported that vacancies for jobs in food preparation, food service, hospitality, tourism and beauty sectors have fallen by as much as 70%. Across all industries, there has been a staff lay-off rate of around 30%.

After a leaked memo hinted at a Cabinet split over the precise date of lifting a lockdown, with some ministers vying for a May 4 reopening and others considering May 25, pressure has increased on the government to formulate a viable timetable towards reopening the country.

Trump Wades in Spurring Hopes for Saudi-Russian Oil Pact

In a crisis weeks in the making, the price of a barrel of Brent crude fell to lows last seen in 2002. With demand falling due to the global coronavirus pandemic, a dangerous dimension to the price stand off between Russia and Saudi Arabia was added to the mix. Believing themselves capable of taking the blow of reduced oil prices, Saudi Arabia turned their taps on fully, in order to pressure the Russians and the Americans. In what was described a game of chicken, Riyadh has been gambling that it can outlast the US shale sector, whose expensive production prices itself out of the oil market. The Saudi moves are aimed ultimately at pressuring Russia into implementing curbs on oil output, thereby controlling prices better. With both the Saudis and the Russias continuing with output full steam ahead, the grounding of flights and people working from home has meant that global oil stores are almost full to the brim. Until late this week, the price of oil and oil company shares were dropping to levels not seen for decades, due to the glut of supply. However, following Trump’s intervention on April 1, oil prices rallied upwards.

On Wednesday April 1, US President Donald Trump told a White House press conference, in reference to the impasse between Saudi Arabia and Russia, “I think that they will work it out over the next few days . . . Both know what they have to do.” However, the President did not reveal what made him so sure of an impending resolution to the stand-off. With the US shale sector on its knees and several shale producing companies on the brink of bankruptcy, Washington has increased its pressure on Riyadh. Regardless of what’s taking place in the background, on Thursday April 4, Brent prices showed signs of recovery. However, there remains a long way to go, as the world remains gripped by the coronavirus pandemic.

Ghost Brokers under HMRC Investigation Jailed for Tax Fraud and Insurance Fraud

Elina Jaksone, 36, and Gagik Kyriacos Manucharyan, 40, were the subject of a HMRC investigation relating to both tax fraud and insurance fraud. Together, the couple from Kent orchestrated as “ghost insurance brokers,” whereby fraudulent insurance was provided to unwitting customers. Furthermore, the pair of fraudsters failed to declare the earnings from their insurance fraud enterprise to HMRC and were thereby guilty of tax avoidance. The two fraudsters’ vehicle insurance fraud involved supplying insurance providers with false details, in order to reduce the cost of insurance premiums, for customers who remained unaware. While enabling customers to purchase insurance cover at reduced prices, most were actually left without cover as their fraudulently acquired policies were potentially null and void.

For each policy they secured, the fraudsters netted £100. Ultimately, from the insurance fraud scheme the pair earned a whopping total of almost £1 million. However, apart from the vehicle insurance fraud, the pair failed to declare their earnings to HMRC. This meant that a tax bill on the £920,000 that they earned remained outstanding. As if this wasn’t enough, Jaksone also fraudulently claimed £82,000 in tax credits and pension credits. Her tax credit scam relied on her pretending to be a single mother with high childcare costs. Furthermore, using her mother’s details, the crooked fraudster also committed pension credit fraud and fraudulently claimed winter fuel allowance payments. On top of this, in an attempt scuppered by HMRC, the serial fraudster also sought to claim pension credits in her father-in-law’s name.

Assistant director of HM Revenue and Customs, David Margree declared, “Jaksone and Manucharyan cheated honest, law abiding people, spending their ill-gotten gains on a lifestyle that many of us can only dream of. They also cheated their customers by providing them with inadequate insurance policies. HMRC will not tolerate fraud. We work closely with other agencies, including the Serious Organised Crime Agency, the Department for Work and Pensions (DWP) and the financial sector to tackle all forms of fiscal fraud and protect the interests of the public.”

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